U.S. Supreme Court deals struggling taxi industry another blow

Chicago’s taxicab industry is likely to turn into a “Wild West” dominated by independent drivers, with fleets disappearing and the city losing control, after the U.S. Supreme Court on Monday dealt the struggling industry a final flow.

By refusing to hear the taxi industry’s appeal, the nation’s highest court let stand a federal appeals court ruling last fall that snuffed out an attempt by the cab companies to level what they called an uneven playing field that favors Uber, whose investors include Mayor Rahm Emanuel’s brother.

The appeals court ruling essentially said that the business models between taxis and ride-hailing services are different and, therefore, they can continue to operate under different sets of rules in Chicago.

That decision validated a 2014 City Council ordinance that let Uber and Lyft operate in the city without taxi medallions, city-regulated fares, fingerprinting or other standards cab companies and their drivers must follow.

Mara Georges, the former longtime city corporation counsel now representing the taxicab industry, said Monday’s ruling could be a death blow for the cab industry as Chicagoans have come to know it.

“The fleets will disappear and you’ll have taxis owned by individual owners. The problem with that is that much of the control the city has exercised over taxicabs has come through the fleet,” Georges said.

“It’s going to end up being more of a Wild West situation where you’ve got all kinds of independent drivers out there just looking to pick up fares and make as much money as they can,” she said.

The only way to prevent that kind of free-for-all is to “level out the playing field” between ride-hailing and taxicabs, Georges said. That’s something the federal appeals court and, now, the U.S. Supreme Court said was legally unnecessary.

“A tremendously big step is to think about the fact that the public is not served when drivers are not fingerprinted and impose a fingerprinting requirement on everybody. All people who drive for hire. Not just some of the people who drive for hire,” Georges said.

The Washington D.C.-based Institute for Justice on Monday claimed victory in the name of passenger choice.

“The Court’s decision has cleared the way for transportation freedom across the country,” Institute for Justice Senior Attorney Anthony Sanders was quoted as saying in a press release.

“In city after city, we are seeing lawsuits like these filed by incumbent businesses that want to freeze the current regulatory environment in amber,” the release said. “And these lawsuits, rightly, are failing. Consumers and entrepreneurs, not lawyers and bureaucrats, should decide what transportation options are available.”

Uber and Lyft have long maintained that a background check based on FBI fingerprinting would discriminate against minorities who are “far more likely to have an interaction with the criminal justice system,” often for minor, nonviolent offenses where the charges are dropped but the record has not yet been expunged.

Last year, a divided City Council agreed to license, but not fingerprint, ride-hailing drivers amid threats from Uber and Lyft to abandon the Chicago market.

Under pressure from Emanuel, Transportation Committee Chairman Anthony Beale (9th) agreed to a compromise that would license all Uber and Lyft drivers after a daylong course that could be completed online and background checks performed by the companies with information shared with the city.

That compromise also stipulated there would be no fingerprinting for at least six months.

The hiatus would be used to appoint a commission charged with conducting an “independent study” of the value and fairness of fingerprinting. If the recommendation was to proceed with fingerprinting, Beale said it would be done. If not, fingerprinting would be eliminated as a requirement for all city employees, the chairman said.

Last month, Beale told the Chicago Sun-Times that the commission was poised to recommend that the city not adopt the requirement for Uber and Lyft drivers — and drop it for other categories of city employees.

In the landmark ruling last fall that went against the taxicab industry, Federal Appeals Court Judge Richard Posner likened the regulatory issues to cities that license dogs but not cats. He said treating Uber drivers like cabbies would effectively protect the taxi business from competition.

“Indeed, when new technologies or new business methods appear, a common result is the decline or even the disappearance of the old,” Posner wrote then.

“Were the old deemed to have a constitutional right to preclude the entry of the new into the markets of the old, economic progress might grind to a halt,” he said. “Instead of taxis, we might have horse and buggies; instead of the telephone, the telegraph; instead of computers, slide rules. Obsolescence would equal entitlement.”

The sharply worded ruling followed Emanuel’s decision to authorize Uber and Lyft to start picking up customers at O’Hare and Midway airports and McCormick Place. Until then, such business had been reserved for taxis, with ride-hailing services allowed only to drop off fares.

In exchange for that lucrative access, Uber and other ride-hailing services pay a $5 surcharge every time they pick up or drop off passengers at O’Hare, Midway, McCormick Place or Navy Pier. The new tax is expected to generate $30 million. Cabs pay a $4 ground transportation tax, but only after airport pickups.